The oil and gas producer, which has $1.8 billion of offshore notes outstanding, cited "tightening in credit conditions" for the default. The company plans to suspend this year's interest payments on bonds due in 2021 and 2022 while it considers asset sales and seeks to restructure the notes, China Energy said in a filing that appeared on the Hong Kong exchange on May 27.

China Energy rose to prominence earlier this year when it pulled out of a $5.2 billion deal to buy a Hong Kong skyscraper from Li Ka-shing's company, after making an unsuccessful bid for Australian oil and gas explorer AWE Ltd.

The company's refinancing woes show China's deleveraging efforts are taking a toll on funding for the corporate sector, particularly via a crackdown on shadow financing. The yield spread on three-year AA rated bonds, considered high-yield in China, over top-rated peers has risen 28 basis points this year to the highest since June 2017.